I don’t think the comparison with ICICI Bank’s 10 year (2008-18) return is appropriate . In Jan 2008 ICICI was trading at more than 5 times price to book only from those levels the 10 year returns are zero. By December 2008 valuations had dropped to about just over one time book from those levels price has gone up 4.5 times. Yes Bank at least now is trading closer to what ICICI was trading in Dec 2008 rather than in Jan 2008. I am not saying Yes Bank is a buy at these levels (who knows how toxic the book is) just saying comparison with ICICI is not correct because that was a case of contraction in multiple where as for Yes Bank the contraction has already happened.

That was story of what happened when key manager left and how new management reacted to crisis that followed . ICICI BANK and YES BANK may not react the same way .

On there are two points : Is YES BANK a good business and secondly is it rightly valued , why I am tracking this thread …

First why I am tracking this thread - I am interested to know future of corporate banks - what can disrupt it , why they will continue to relevant , why they will make equal or more money than in past .

Will Yes bank continue to be a good business -

If IBC and NCLT works as per plan - All corporate banks should do well - esp on asset recovery side

If corporate bond expands in big way - Relevance of corporate banks will diminish as good corporate will not like intermediaries and will directly approach investors / mf

If fintec expands lot of transaction ( fee based income ) will move out of corporate banks

Finally RK was known to be good negotiator and got growth capital @ attractive rates - will new management will be able to do that is big question .

Valuation : This is something very difficult to say when book value itself is big question . But for corporate banks Price to book of < 1 is considered value zone …

When there is a group looking at the clouds, each individual may or will see a different pic. Same is with any stock , if someone wants to hold or fresh buy will see completely different then who are selling or negative on stock.
Yesbank is down form high of 400 plus to minus 200. Holding or purchased by me in past solely on Fundamentals have not given decent returns, and the major reason was holding that particular stock too long.
No one is going to gain in near future if the purchase of Yesbank was done around say 300+. If one is here in the stock market to get better returns then FD or even MF, better to switch to other stocks instead of holding on to same one.
Few of the members have posted the charts / technical analysis, thanks a lot, and these charts normally don’t lie. Media / Management can.
Thanks Hitesh and Yogesh for sharing their views, cheers.
Disc: Was invested in Yesbank , not anymore, Buy price was at 302 / squared off at 262. If had waited, would have been in bigger loss.

The below thoughts sound as if we are able to look into the future stock prices with a good sense of certainty. If legends like WB and PL have always failed at this, how are we able to do it?

hitesh2710:

These kind of falls rarely induce a V shaped recovery. Those wanting live examples can have a look at charts of Edelweiss and IIFL. There are hardly any bounces. If in case of Yes bank too a similar path is followed it will at some point of time stop falling and move in a tight range. In the current market mood I dont think the price of Yes Bank is going to go up in a hurry. There might be the odd 10-20% upmove off and on but when the broad trend is down why should there be any haste in buying? One just needs to have a look at the kind of price damage that has happened in most financial stocks. When a sector previously fancied goes out of favour, this is exactly what happens. These falling stocks will become cheap and cheaper on all valuation parameters on their way down.

Like you, I also started investing after reading books on PL, WB and some more. Now that we have covered good couple of miles on our investment journey, we can call the words of these legends as gyan baazi?

hitesh2710:

There will be a lot of arguments and gyaan baazi about efficient market hypothesis and what WB said about them. For all practical purposes, once a sector loses its most favored status, it takes a lot of time for it to make a comeback.

You have to take these comments in the context of the whole paragraph. People tend to preach investing quoting WB and CM at the drop of a hat. They can come up with a quote of either of these greats or some other luminary to justify any argument.

WB had given his statements at a time when efficient market theory was at its zenith and a lot of advocates of the theory used to go gaga over it. Also in those times the information spread was not as quick and heavy as it is now. So at that time probably markets were not that efficient. These days with a lot of information and sometimes overload of it, news tends to spread very fast and stock prices tend to react much faster and by the time someone thinks of reacting in terms of either buying or selling, the damage to either side is already done.

The gyaan baazi comment was in continuation of the post from @richdreamz post where he mentioned specifically about some guys and newcomers with hardly any investor experience giving truckloads of views on how to invest. (nothing wrong with that but its the repetition of the same stuff which is jarring to the eyes.

While I appreciate the confidence Mr Rajat Monga had in yday’s interview, I still felt a tinge of denialism in his demeanor wrt the problems of weak compliance.

Reading about the multiple letters sent by RBI to Yes Bank without any response or actions taken on them did shake my confidence.

Don’t understand how can a business which runs on trust & is regulated so tightly can afford to be lax on compliance & credit mgmt!

Plus, if the first of these letters (sent in April) by RBI had come to public knowledge, I’m sure the situation wouldn’t have gotten so worse…for RK or for other investors. It’d have forced the board to take actions promptly!

I hope the new leadership takes utmost care to improve this image of poor compliance with RBI’s NPA standards, and resolving this apparent conflict of interest with RK’s other businesses.

Its really very tough to avoid biases if your are holding some stocks of a particular company even when there is clear signs of corporate governance issue. Same people who was posting negative notes about Mirza International wrt their corporate governance, management salary etc are now ignoring the same issues with Yes bank even after regulator RBI red flagged numerous issues related to Management misconduct, poor corporate governance, under reporting of NPA etc. Nothing wrong in ignoring but views shouldn’t change wrt company one owns or not.

No position Yes Bank. Have 3% portfolio allocated to Mirza International.

Know a day’s media/retail knows better than street - That’s the problem and give opportunity for smart investors - over info and everybody guessing what could be and giving lot of tips and rumours - In this digital world , it’s better to know what to skip rather than read everything and leads to confused state - need own philosophy and mraket provide opportunities to everybody and it’s like broken clock theory . Even in last two months Yes bank swinged 230 to 170 to 250 to 150 … in fact what changed for yes bank business in last 2 months - even thier deposits growing … only people perception changing based on news - if something wrong with fundamentally then we need to worry … else it’s part of life … it’s like 80/20 … we worry news or latest updates (80 %), which is ( 20% ) of impact of business or value of company . Ask simple questions and get great insights - simplify … Does Yes bank worth 37k cr ? With 6lac cr compitator … even before Rana Kapoor news , market discounted most of nagitives of bank ( not even crossed or arond 3 times BV ) , why ? And now it’s just elevated with latest happenings ? Does Yes bank stay relavent in next 4 to 5 years ? Who will fill the gaps of NBFC ? … long way to go Pvt banks with reasonable valutions compines … may be time correction but won’t see loss of perment capital loss …

Look at this way - govt is keen on hiring private sector talent to revamp PSU banks and here the promoter wants retired PSU names with questionable past to decorate the board. It all seems to be deliberate to enable him to do backseat driving. Not a great development if someone is looking for early signs of revival.